NSE Puts Nine Stocks Under F&O Ban Due to Market-Wide Position Limit Breach

NSE Puts Nine Stocks Under F&O Ban Due to Market-Wide Position Limit Breach. Image/Wikipedia

Stocks Restricted in F&O Segment

In a move to regulate trading activities, the National Stock Exchange (NSE) has imposed a ban on nine stocks in the futures and options (F&O) segment, effective Friday, September 8, 2023. These stocks have breached the 95% threshold of the market-wide position limit (MWPL) set by the NSE. While they are restricted in the F&O segment, they will remain available for trading in the cash market.

Nine Stocks Placed Under Ban

The stocks placed under the F&O ban by the NSE include:

1. Steel Authority of India (SAIL)
2. Punjab National Bank (PNB)
3. Manappuram Finance
4. Bharat Heavy Electricals Limited (BHEL)
5. India Cements
6. Delta Corp
7. Hindustan Copper
8. Balrampur Chini Mills Limited
9. Indiabulls Housing Finance

Regular Updates to F&O Ban List

The NSE routinely updates its list of securities subjected to F&O trading restrictions. This proactive measure aims to maintain market stability and prevent undue speculation in derivative contracts.

Trading Guidelines During Ban Period

The NSE has issued clear guidelines for trading in these securities during the F&O ban period. It states, “It is hereby informed that all clients/members shall trade in the derivative contracts of said security only to decrease their positions through offsetting positions. Any increase in open positions shall attract appropriate penal and disciplinary action.”

No Fresh Positions Allowed

During the F&O ban period, traders and investors are prohibited from initiating fresh positions in any of the F&O contracts linked to the specified stocks. This restriction serves as a safeguard against excessive market volatility and speculative trading.

Ensuring Market Orderliness

The imposition of F&O bans by stock exchanges is a regulatory measure aimed at maintaining market orderliness and protecting market participants from undue risks. It helps prevent situations where a particular stock’s derivatives trading activity exceeds the predetermined limit, which could lead to market distortions.

Market Participants’ Compliance

Market participants, including traders and investors, are advised to comply with the NSE’s directives during the F&O ban period. Adherence to these guidelines ensures a well-regulated and stable trading environment.

Regulatory Oversight

Regulatory authorities continuously monitor and adjust trading regulations to align with market dynamics and protect the interests of all stakeholders. The imposition of F&O bans is one such regulatory tool used to safeguard market integrity.